 Solution

Choose local coordinates $y^1,\dots ,y^{D-1}$ on the hypersurface $\Sigma$, and let ${\Phi }_s$ be the local flow of the vector field $X$. The map $F(s,y)={\Phi }_s(p(y))$ follows the integral curves of a vector field starting at $p(y)\in \Sigma$. At $s=0$, its differential maps the $s$ direction to $X$ and the remaining directions to a basis of $T_p\Sigma$. Transversality makes these vectors linearly independent, so the inverse function theorem makes $F$ a local manifold chart.

Set $x^0=s$ and transport the $y^i$ unchanged along each integral curve of a vector field. Then the adapted coordinates satisfyThe flow-box theorem gives this construction locally. The parameter is the flow parameter, and need not be arc length; a global manifold chart would require additional hypotheses.